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Why Is ITT (ITT) Down 14.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for ITT (ITT - Free Report) . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ITT due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
ITT Q4 Earnings Surpass Estimates, Revenues Miss, Orders Up Y/Y
ITT reported mixed fourth-quarter 2021 results, wherein earnings surpassed estimates by 1%, but sales missed the same by 2.2%.
The company’s adjusted earnings in the reported quarter were $1.06 per share, surpassing the consensus estimate of $1.05. Also, the bottom line improved 5% from the year-ago figure of $1.01. Share buybacks aided the results (by 1 cent per share). However, inflation in raw material and supply-chain woes had adverse impacts.
In 2021, the company’s earnings came in at $4.05, an increase of 26.6% on a year-over-year basis.
Revenue Details
In the quarter under review, ITT’s net sales were $685.4 million, reflecting a year-over-year decline of 3.3%. The decline was primarily attributable to a 2.1% decrease in organic sales. In the reported quarter, total orders were $722.2 million, increasing 8.6% year over year. The metric increased 9.9% on an organic basis.
The company’s revenues lagged the Zacks Consensus Estimate of $701 million.
It currently reports under three business segments — Industrial Process, Motion Technologies and Connect and Control Technologies. The segmental information is briefly discussed below:
Revenues from Industrial Process totaled $216.3 million, declining 5.3% year over year. The decline was primarily attributable to a 3.9% decrease in organic sales. Supply-chain challenges adversely impacted the company’s projects business in the quarter. Orders increased 39.2% year over year on an organic basis.
Revenues from Motion Technologies totaled $323.6 million, reflecting a year-over-year fall of 8.1%. The results suffered from a 7.2% decline in organic sales. Supply-chain challenges affected the operations of the company’s Friction and Wolverine businesses. Orders fell 6.6% from the year-ago quarter on an organic basis.
Revenues from Connect and Control Technologies totaled $145.8 million, increasing 13% year over year and up 14.3% organically. Results benefited from strength in the industrial, transportation and commercial aerospace end markets. Orders expanded 13.5% year over year on an organic basis.
In 2021, the company’s net sales came in at $2,765 million, up 11.6% year over year.
Margin Profile
In the quarter, ITT’s cost of revenues decreased 5.8% year over year to $461.5 million. It represented 67.3% of the quarter’s sales compared with 69.2% in the year-ago quarter. Gross profit increased 2.4% to $223.9 million, and as a percentage of sales, it was 32.7%.
General and administrative expenses fell 7.6% year over year to $46.1 million, while sales and marketing expenses increased 7.3% to $38.4 million. Research and development expenses jumped 5.5% to $24.9 million.
Adjusted segmental operating income in the quarter increased 3.8% year over year to $124.7 million. Margin expanded 130 basis points (bps) to 18.2%. Results benefited from lower costs and expenses. However, supply-chain woes, inflation in raw material costs, woes related to growth investments and other headwinds played spoilsport.
Balance Sheet and Cash Flow
Exiting 2021, ITT had cash and cash equivalents of $647.5 million, up 10.5% from $585.8 million in the previous quarter. Its commercial paper and current maturities of long-term debt were $197.6 million, while total non-current assets were $1,843.3 million.
In 2021, ITT used $8.4 million for its operating activities against net cash generation of $435.9 million in the previous year. Capital expenditure was $88.4 million, up from $63.7 million in the previous year. Free cash outflow was $96.8 million against an inflow of $372.2 million a year ago.
In 2021, the company paid out dividends of $75.8 million, up from $59 million in the previous year. Share repurchases were $116.5 million, up from shares worth $84.2 bought back in 2020.
Outlook
For 2022, the company anticipates adjusted earnings of $4.30-$4.70 per share, suggesting year-over-year growth of 6-16%.
Revenues are expected to increase 7-9% year over year and 9-11% organically. Adjusted segmental operating margin is predicted to increase 40-130 bps year over year to 17.6-18.5%. Free cash flow is expected to be $300-$325 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.78% due to these changes.
VGM Scores
At this time, ITT has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ITT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is ITT (ITT) Down 14.2% Since Last Earnings Report?
It has been about a month since the last earnings report for ITT (ITT - Free Report) . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ITT due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
ITT Q4 Earnings Surpass Estimates, Revenues Miss, Orders Up Y/Y
ITT reported mixed fourth-quarter 2021 results, wherein earnings surpassed estimates by 1%, but sales missed the same by 2.2%.
The company’s adjusted earnings in the reported quarter were $1.06 per share, surpassing the consensus estimate of $1.05. Also, the bottom line improved 5% from the year-ago figure of $1.01. Share buybacks aided the results (by 1 cent per share). However, inflation in raw material and supply-chain woes had adverse impacts.
In 2021, the company’s earnings came in at $4.05, an increase of 26.6% on a year-over-year basis.
Revenue Details
In the quarter under review, ITT’s net sales were $685.4 million, reflecting a year-over-year decline of 3.3%. The decline was primarily attributable to a 2.1% decrease in organic sales. In the reported quarter, total orders were $722.2 million, increasing 8.6% year over year. The metric increased 9.9% on an organic basis.
The company’s revenues lagged the Zacks Consensus Estimate of $701 million.
It currently reports under three business segments — Industrial Process, Motion Technologies and Connect and Control Technologies. The segmental information is briefly discussed below:
Revenues from Industrial Process totaled $216.3 million, declining 5.3% year over year. The decline was primarily attributable to a 3.9% decrease in organic sales. Supply-chain challenges adversely impacted the company’s projects business in the quarter. Orders increased 39.2% year over year on an organic basis.
Revenues from Motion Technologies totaled $323.6 million, reflecting a year-over-year fall of 8.1%. The results suffered from a 7.2% decline in organic sales. Supply-chain challenges affected the operations of the company’s Friction and Wolverine businesses. Orders fell 6.6% from the year-ago quarter on an organic basis.
Revenues from Connect and Control Technologies totaled $145.8 million, increasing 13% year over year and up 14.3% organically. Results benefited from strength in the industrial, transportation and commercial aerospace end markets. Orders expanded 13.5% year over year on an organic basis.
In 2021, the company’s net sales came in at $2,765 million, up 11.6% year over year.
Margin Profile
In the quarter, ITT’s cost of revenues decreased 5.8% year over year to $461.5 million. It represented 67.3% of the quarter’s sales compared with 69.2% in the year-ago quarter. Gross profit increased 2.4% to $223.9 million, and as a percentage of sales, it was 32.7%.
General and administrative expenses fell 7.6% year over year to $46.1 million, while sales and marketing expenses increased 7.3% to $38.4 million. Research and development expenses jumped 5.5% to $24.9 million.
Adjusted segmental operating income in the quarter increased 3.8% year over year to $124.7 million. Margin expanded 130 basis points (bps) to 18.2%. Results benefited from lower costs and expenses. However, supply-chain woes, inflation in raw material costs, woes related to growth investments and other headwinds played spoilsport.
Balance Sheet and Cash Flow
Exiting 2021, ITT had cash and cash equivalents of $647.5 million, up 10.5% from $585.8 million in the previous quarter. Its commercial paper and current maturities of long-term debt were $197.6 million, while total non-current assets were $1,843.3 million.
In 2021, ITT used $8.4 million for its operating activities against net cash generation of $435.9 million in the previous year. Capital expenditure was $88.4 million, up from $63.7 million in the previous year. Free cash outflow was $96.8 million against an inflow of $372.2 million a year ago.
In 2021, the company paid out dividends of $75.8 million, up from $59 million in the previous year. Share repurchases were $116.5 million, up from shares worth $84.2 bought back in 2020.
Outlook
For 2022, the company anticipates adjusted earnings of $4.30-$4.70 per share, suggesting year-over-year growth of 6-16%.
Revenues are expected to increase 7-9% year over year and 9-11% organically. Adjusted segmental operating margin is predicted to increase 40-130 bps year over year to 17.6-18.5%. Free cash flow is expected to be $300-$325 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -12.78% due to these changes.
VGM Scores
At this time, ITT has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ITT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.